Homeowner associations start foreclosures to collect dues

I was interviewed for this article, which appeared in USA Today. Unfortunately, I wasn't quited!


IRVING, Texas — Thousands of Americans who have generally kept up with their mortgages are still in danger of losing their homes because they made a fateful trade-off in this shaky economy: They let their homeowner association dues slide.
Many homeowners are learning to their surprise that condo and neighborhood associations that oversee security patrols, mow lawns, plant flowers and clean the community swimming pool might have the right to foreclose when dues aren't paid. That right is often written into the purchase agreement signed by the homeowner.

"We have compassion for those folks," says Andrew Schlegel, executive vice president for Merit Property Management, which manages more than 140,000 California homes in community associations. "At the same time, we feel for the rest of the homeowners who are paying their dues."

Most people end up saving their homes. HOA boards often work with down-on-their-luck neighbors to come up with some sort of compromise. That's what happened with Lacey Pilat, who lost her job catering lavish corporate parties and nearly lost her two-story house in this Dallas suburb.

The management company for the Beacon Hill homeowner association sent Pilat a foreclosure notice in April after several attempts to collect her $450 annual dues, which paid for the mowing of front lawns. The amount she owed snowballed to $1,800 after penalties and fees. The company eventually agreed to let Pilat and her husband, Steve, pay the debt over time.

Gauging the number of foreclosures nationwide by HOAs is difficult. But in Texas, foreclosure attempts initiated by HOAs in 19 counties are up 30% from two years ago, according to Dallas-based Foreclosure Listing Services. In the San Antonio area alone, foreclosure actions by HOAs jumped to 170 in April from 21 in April 2008, RexReport.com says.

In Florida, attorney Bob Tankel, who represents hundreds of homeowner and condo associations, says he has increased his staff from three to 16 in the past 18 months to handle a mounting caseload of 3,500 open collections. About one-fifth of those cases have reached foreclosure, he says.

In California, Schlegel says more than 6% of the homes that his company manages are in some stage of delinquency on membership dues, up from around 1% in previous years.

More than 59 million people live in more than 300,000 association-governed communities nationwide, according to the Community Associations Institute, the nation's largest group for homeowners and condo boards.

If the house is foreclosed on, it is sold, and the HOA takes what it is owed from the proceeds. Proceeds also go to the bank to pay off the mortgage.

By: Paul Weber, Associated Press

San Antonio HOA Sells Disabled Couple's Home

From WOAI.com

Every day is a struggle for Dan and Elaine Lambert. Dan has a traumatic brain injury and is partially paralyzed. He was struck by a train while working for the railroad. Since the accident, he's had two strokes and four heart attacks. Elaine says she went for six or seven weeks with open sores on her legs. She suffers from a disease that causes painful sores and swelling in her legs and has bouts of severe depression.

With their belongings already packed after getting an eviction notice from the new owner, Dan and Elaine each take some of the blame. The couple says the HOA dues were simply not a priority as they dealt with getting through their illnesses. They say certified letters from the HOA's attorney went unopened or thrown out because they thought it was junk mail.

Still, they think the HOA has gone too far. "There's no way in hell this association should do this to retired people or disabled people," Dan told us.

Homeowners' association usually don't do sell homes of those who owe them money. Instead, if you don't pay your dues, the association slaps a lien on your house. That way you have to pay up before you can sell it.

Instead filing a lien and leaving it at that, the Heritage Hills HOA took the unusual step of foreclosing and selling the house. The Lambert's home sold at a public auction on the steps of the Bexar County Courthouse. The house valued at $156,000 sold for only $2,200. That is the amount the Lamberts owed after late fees, attorneys fees and interest were added.

Tom Newton is the HOA attorney who sold the Lambert's home. "I'm not kicking anybody out of their house," he explained to the Trouble Shooters. "What I'm doing is holding them to the obligation they accepted when they bought the property."

Trouble Shooter Brian Collister asked Newton, "[Do] you feel comfortable kicking a disabled family out of their home for a few hundred dollars in HOA fees?"

Newton replied, "I feel comfortable in taking those steps necessary to enforce my client's legal rights, and if that means that ultimately somebody may go through this foreclosure process, it's unfortunate, but it is a consequence of their own making." During all of this, no one with the HOA or its attorney ever picked up the phone and called or came to the Lambert's home. They never simply knocked on the door and tried to talk to them about why they were not paying their fees.

Collister asked Newton about this; "Don't you think if you're going to take their home away from them you should at least go talk to them face to face?"

"No, I don't," Newton answered, "I don't, and I'll tell you there are some people out there who have whatever sort of issues they have. They become violent when you approach them about their shortcomings or failure to abide by their obligations, and I think it is a dangerous situation."

The Lambert's say they're not dangerous or violent. They're just surprised that a homeowners association can go so far because they owe so little. The HOA says it sent the Lamberts certified letters during the three years they did not pay their dues, and they had plenty of opportunities to pay up and keep their house.

Wednesday, the Lamberts sit down with the HOA and the investment company that bought the house. They're going to try and come up with a way where the Lamberts can keep their home. We'll let you know what happens.

San Antonio Homeowners Association Threatens Foreclosure of Military Couple Stationed Overseas from WOAI.com

A San Antonio couple, serving in the military overseas, almost loses their home. Not because they failed to make their mortgage payments, but because they were behind on their homeowners association fees. This military couple was fighting a losing battle, so they asked News 4 Trouble Shooter Jaie Avila for help.

David and Melody Gates admit they fell behind on their homeowners association fees when Melody got sick, but they say when they tried to pay what they owed, the association and its attorney kept sending their checks back and piling on more fees. The couple is stationed at an air force base in Germany.

The Gates say since late last year, they have sent three separate checks to the Westover Crossing Homeowners Association to pay off all the dues they owe for their home. But each time, the checks were returned, because by the time they arrived in the mail, more late fees, and attorneys fees had been added to the total. The attorney for the association refused to accept partial payment.

"Every time they mail it back to me, they tell me I owe them more money," says Melody Gates. "They tell me that I owe them late fees and I also, on top of that, I owe them attorney fees. And I don't understand why a company, knowing that we're so far away, is being so unjust to us."

After six months of this, the Gates' bill grew from $1,100 to more than $1,800.
The homeowners association filed a lien against their home and was threatening foreclosure. So the desperate couple e-mailed the Trouble Shooters.

"I reached out to you, because I don't know what else to do," says Gates. "We have tried very hard to make this bill paid in full."

The Trouble Shooters contacted Spectrum Management, which runs the Westover Crossing Homeowners Association, and its attorney, Tom Newton, Jr., the man who has been sending the Gates' all those intimidating letters. Newton wouldn't comment, but this isn't the first time the Trouble Shooters have come across attorney, Tom Newton.

Last year, Newton, who was working for another homeowners association, foreclosed on an elderly disabled couple, Dan and Elaine lambert, because they hadn't paid $380 in HOA fees. At the time he said he felt justified in foreclosing on struggling homeowners who are only a few hundred dollars behind on their HOA dues.

"I feel comfortable in taking those steps necessary to enforce my client's legal rights," said Newton at the time. "And if that means that ultimately somebody may go through this foreclosure process, it is unfortunate. But it is a consequence of their own making."

Although, he wouldn't talk to us, a few days after we contacted Newton, he and the Westover Crossing Homeowners Association agreed to stop tacking on fees and settled the dispute with the gates for $1,300. Almost $600 less than they had been demanding.

If you fall behind on your HOA fees, they can legally do the same thing to you. Be sure to read your deed restrictions which should explain what kind of notice they have to give you before trying to foreclose. And get them to agree to a re-payment plan in writing, to avoid unexpected fees.


If you feel that you are being harassed or treated unfairly by a Homeowners Association (HOA), contact San Antonio attorney Trey Wilson. Mr. Wilson is an experienced real estate lawyer who routinely represents both individuals under seige by their HOAs, and HOAs with claims agaisnt developers/builders. Trey Wilson was named by Scene in SA Magazine as one of San Antonio's Best real Estate Litigation Attorneys. He may be reached at 210-223-4100 or www.sa-law.com